Sichuan SwellfunLtd (SHSE:600779) Ticks All The Boxes When It Comes To Earnings Growth

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Sichuan SwellfunLtd (SHSE:600779). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Sichuan SwellfunLtd with the means to add long-term value to shareholders.

Check out our latest analysis for Sichuan SwellfunLtd

How Fast Is Sichuan SwellfunLtd Growing Its Earnings Per Share?

Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So it's easy to see why many investors focus in on EPS growth. Sichuan SwellfunLtd boosted its trailing twelve month EPS from CN¥2.43 to CN¥2.82, in the last year. There's little doubt shareholders would be happy with that 16% gain.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. While we note Sichuan SwellfunLtd achieved similar EBIT margins to last year, revenue grew by a solid 15% to CN¥5.2b. That's a real positive.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

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You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Sichuan SwellfunLtd's future profits.

Are Sichuan SwellfunLtd Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that Sichuan SwellfunLtd insiders have a significant amount of capital invested in the stock. As a matter of fact, their holding is valued at CN¥144m. That shows significant buy-in, and may indicate conviction in the business strategy. Despite being just 0.6% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Is Sichuan SwellfunLtd Worth Keeping An Eye On?

As previously touched on, Sichuan SwellfunLtd is a growing business, which is encouraging. If that's not enough on its own, there is also the rather notable levels of insider ownership. These two factors are a huge highlight for the company which should be a strong contender your watchlists. We don't want to rain on the parade too much, but we did also find 2 warning signs for Sichuan SwellfunLtd (1 doesn't sit too well with us!) that you need to be mindful of.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in CN with promising growth potential and insider confidence.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.